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HPE ProLiant Pricing Slashed In SMB Server Share Grab: Exclusive

‘We had been a little reluctant to meet and beat the competition on price,’ says Hewlett Packard Enterprise Vice President of North America Channels and Alliances Terry Richardson. ‘We are now taking a much more aggressive posture. That is good news for our distributors, resellers and customers.’

Hewlett Packard Enterprise this week slashed its Smart Buy Express ProLiant server pricing by more than 5 percent—its biggest price cut on the ready-to-ship offerings in years.

Partners said the price drop represents an aggressive new attack by HPE to grab server share in the SMB and midmarket segments with its bread-and-butter HPE ProLiant server portfolio including new Gen10 Servers powered by Intel's Cascade Lake Xeon processor.

"The number sounds small, but these were already aggressively priced systems," said a source familiar with the price reductions. "This is more than 5 percent in street prices for transactional systems. There hasn't been a cut like this from HPE for years."

[RELATED: HPE CEO Antonio Neri: Intelligent Edge Is The ‘Next Frontier']

HPE Vice President of North America Channels and Alliances Terry Richardson confirmed the price cuts, referring to it as a "great opportunity" for all partners leveraging the "quick-ship" capability of HPE distributors to capture new accounts in the SMB and midmarket segments.

"The goal is to grow our market share aggressively in the transactional server market and to continue to accelerate the growth of new logos for ourselves and partners in the SMB and midmarket segments," said Richardson. "We had been a little reluctant to meet and beat the competition on price. We are now taking a much more aggressive posture. That is good news for our distributors, resellers and customers."

The top sales executive for a national HPE partner, who did not want to be identified, said the new pricing action is a watershed moment in the battle for server market share.

"This is huge," said the sales executive. "HPE is getting more aggressive to go after the everyday server money in SMB and midmarket. It means we are going to see some good healthy competition in the server market, which we haven't had for some time. It's a big deal for the channel."

At the same time HPE is stepping up its transactional server sales march it is also getting more aggressive on its value portfolio with new 3 percent to 8 percent up-front incentives on medallion pricing for 3Par, Nimble, SimpliVity and Synergy. "This provides a richer margin opportunity for partners and allows us to get to very competitive pricing faster," said Richardson.

Richardson said the new up-front incentives in the value portfolio and the price cuts on the Smart Buy Express transactional server segment come with HPE's software-defined portfolio—particularly HPE InfoSight predictive analytics on both servers and storage—driving more on-premises solutions. "InfoSight gives us a real competitive advantage," he said. "It gives customers the benefit of our cross-stack analytics for both compute and storage to diagnose problems before they occur."

Peter Larocque, president of North America technology solutions for Synnex, one of HPE's top distributors and winner of the HPE Aruba distributor of the year, said the SMB server price cut is a "big deal" for Synnex and its partners.

"We are excited about this," he said. "It's a welcome move. With the focus on the value segment, we may have mutually left some [SMB server] business on the table because the pricing needed to be a little more aggressive."

The server price cuts strengthens HPE's volume to value full product portfolio ecosystem, said Larocque. "The server and accessory products are now all more aggressively priced," he said. "We think that is a really good idea. It is a competitive marketplace out there. If you lose the compute business, the ability to get all the other stuff—networking, hyper-converged, software and services—can be put at risk."

Larocque said the price cuts will have a positive impact on HPE Gen10 server sales. "There has never been an issue, quite frankly, with partners feeling that the HPE products—server, storage and networking—are first class. On the server side there was an issue with them being the right price. We feel like HPE has fixed that. HPE's Gen10 servers will be well adopted. Technology has never been an issue for HPE. What's more, their programs are good and they are trusted by the partners."

Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla., solution provider, said the price cut will definitely drive more sales of HPE servers for his company. "This is HPE reasserting itself in the SMB server market," he said."It's a big play for HPE to dominate the SMB server market where every penny counts. Partners and customers are always looking for the best server price. Sometimes vendors forget how much business is done in the SMB market."

Goldstein said many SMB customers are continuing to run on-premises servers rather than moving to a public or private cloud. "Those decisions are based on the line-of-business application," he said. "A lot of line-of-business applications are just not effective in public cloud."

Richardson said on-premises server sales remain strong even in the face of public cloud. "The percentage of on-prem purchases is holding strong," he said. "That remains a very robust market opportunity for us. Partners focused on SMB and midmarket—which is 100 percent channel for HPE—are seeing a lift in their business. They are capturing new customers and new workloads that belong on-premise. The message to partners is to look to HPE to address all of their customers’ needs."

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